Knology Wins Round In Lawsuit Linking It To NebuAd

The Internet service provider Knology has won a round in a potential class-action lawsuit accusing it of working with defunct behavioral targeting company NebuAd to install "spyware" on subscribers' broadband lines.

U.S. District Court Judge Clay Land in the Middle District of Georgia recently sent the case to arbitration, ruling that the subscriber who sued, Andrew Paul Manard, had previously agreed to resolve disputes with Knology out of court.

The judge wrote that Manard signed a contract "that clearly and unambiguously incorporated" an arbitration clause. "That arbitration provision was readily available for plaintiff's review if he had bothered to read it," Land wrote.

The decision marks a victory for Knology, which no longer has to face the possibility that a jury could award large damages. In addition, it's possible that this lawsuit won't be able to proceed as a class-action in arbitration. But the costs of litigating on behalf of just one subscriber could prove prohibitively expensive.

Scott Kamber, the lawyer who brought the case on behalf of Manard, says he is "evaluating all options," adding that the ruling concerned only Manard, and not other potential plaintiffs. He declined further comment.

The ruling marks the latest fallout from NebuAd's failed attempt to launch an ISP-based behavioral targeting platform in the U.S. The platform, which relied on deep packet inspection, riled privacy advocates as well as lawmakers. Unlike older behavioral targeting companies that only collected data from a network of publishers, Internet service providers have access to all Web activity -- including users' searches and their visits to non-commercial sites.

The company's emergence spurred congressional hearings, following which NebuAd suspended plans for further tests. The company officially folded last year.

Knology was one of six ISPs to test NebuAd's platform; the others were Bresnan, Cable One, CenturyTel, Embarq and Wide Open West. (CenturyTel and Embarq have since merged, while Cablevision agreed to buy Bresnan.)

In 2008, a group of consumers sued all six ISPs and NebuAd for allegedly violating federal and state laws with the platform. Last year, a federal judge in the Northern District of California dismissed the case against the ISPs, ruling that they shouldn't have to defend themselves in California when they had no contact with the state except for their contract with the Redwood City-based NebuAd. Lawyers for the consumers then re-filed the cases in various courts throughout the country.

Only the case against Knology has been sent to arbitration. Others remain pending. Court records show that the lawsuit against NebuAd is slated for a conference on Monday.